As you know, real estate agents make their money in the form of commissions. They don’t make wages or get a salary. Instead, when agents help clients buy or sell properties, they get (typically) a percentage of the sale price as payment for the services they provide. Many buyers and sellers think agents charge too much. But do they really. Let’s find out. Discover 5 things you should know about real estate agent commissions for Oklahoma City agents.
1. What You Get for Your Money
You may be surprised to learn just how much you get for the real estate commissions you pay Oklahoma City agents. And it’s not the obvious services they provide. You’re also benefiting from their ongoing training, years of experience, and highly developed skills. Here’s just some of what you get for your money . . . .
- Access to the multiple listing services (MLS)
- A carefully crafted listing with compelling copywriting
- Properties researched for buyers
- Properties marketed for sellers
- Negotiations conducted for price, timeline, and repairs
- Knowledge of the local market
- Assistance with paperwork
- Questions answered and guidance provided throughout the whole process
2. What It Costs Oklahoma City Agents
What many people don’t realize is that agents are working on spec – payment isn’t guaranteed. And beyond that, they have a lot invested in a transaction, and real estate commissions help them recoup those considerable costs.
The costs agents need to recover include “office fees, technology fees, license fees, marketing, and insurance fees. Then there are the specific costs they need to invest in for your home. They are betting this money on their ability to sell your home, and they are doing it out of their own pocket upfront. Between transportation, signs, open houses, printing flyers, newspaper and magazine ads, photography, and online advertising, this can easily be thousands of dollars. This is only the tip of the iceberg of what great agents will do as well.”
What this means, then, is that an agent may end up being in the negative on a lower-end home. Effective marketing isn’t cheap: “a single-page ad on a top-level website or newspaper can easily run $5,000 to $7,000 alone.” When you factor all this in, it’s not a stretch to say that agents are underpaid.
3. Who Pays Agent Commissions
You’ve probably also heard that the seller pays the real estate commissions. Technically, that’s true, but not so in actual practice. Consider . . .
When a buyer closes on a house, a wire transfer is made to an escrow company. The seller then pays specific fees, and among those, two of the line items are the commissions – one for the seller’s agent and one for the buyer’s agent.
The buyer thus indirectly pays part of the commissions because the seller typically prices so that the sale price will cover those costs. Otherwise, the seller could accept a lower offer and still wind up making the same amount of money.
4. FSBO May Cost More
Some sellers decide to save what they’d spend on real estate commissions and do a for-sale-by-owner deal (FSBO). But the reality is that they may actually wind up paying more with an FSBO than they would by hiring an agent and paying the commissions. Here’s why . . .
“If you just try to sell yourself, that means investing in all the marketing yourself, and paying for it upfront. Plus, you’ll definitely need a real estate attorney to help negotiate, complete contracts, and accompany you at the closing. Once you start marketing, you’ll also find that you are mostly approached by Realtors, and they aren’t going to show your home to their interested and qualified buyers unless you agree to pay a commission.”
“Then there are FSBO websites or flat fee MLS services that will list your home on their sites, or sell you DIY marketing materials. Again, this is an upfront investment, with no guarantee of results. What they don’t typically tell you is that no one is going to show your property, unless you offer a commission to buyers’ agents.”
5. Real Estate Commissions May Be Negotiable
Many people just take it as a given that they’ll have to pay 6% to 10% of the sale price in real estate commissions. But these commissions may in fact be negotiable. Oklahoma City agents may be willing to negotiate lower rates under the right conditions, “depending on the type of transaction, the services required, and the frequency of business.”
“For example, if you are a real estate investor selling and buying 10 homes a month, an agent might be willing to work a 50% off deal in exchange for the volume. If they are receiving a referral from a trusted source they may offer a modest discount, while still giving a full-service experience. If you don’t need the agent to host open houses, and they can secure a buyer directly, without having to split with another agent, then they may offer a discount relative to their savings.”
Putting It All Together
When it’s all said and done, then, good agents are well worth the commissions you have to pay. But you do need to make sure you work with an experienced, local Oklahoma City agent. If you want to make sure you get all you should for your real estate commissions, contact us today at (405) 521-1817.